Muzaffarnagar based MSME, has reached out to the DC MSME complaining about their ongoing coercive experience with Kotak Mahindra Bank with regards to term loan availed under ECLGS.
In the letter to the Development Commission, MSME, the Managing Director of Chakradhar Chemicals Pvt Ltd, Neeraj Kedia pointed out that despite writing to the bank and offering them to pay their outstanding in full with interest including the foreclosure charges on term loan, the bank did not respond to their request rather they registered a complaint against the SME.
Kedia also said, “Kotak Mahindra Bank Ltd. (KMB) sent us a renewal offer after about 6 months stipulating repayment of ECLGS for Rs. 1.50 crore by 05/01/22 instead of an enhancement.”
Chakradhar Chemicals had not accepted their offer stating that the substantial reduction, that too of ECLGS, would have impacted their working capital adversely.
They had communicated their observations and comments through a letter to the bank.
In its letter to the bank dated 10th December, 2021, Chakradhar Chemicals had said, “Our cash credit arrangement with you was Rs 10 crore while your present letter shows reduction from Rs 10.9 to 10 crore. We are never communicated of any enhancement to Rs 10.9 crore while processing fee is also charged last month on Rs 10.9 crore. It was assured by Ms. Gauri Sabs, VP, that excess amount of processing fee charged would be refunded. You are requested to refund the same forthwith. Further, you have charged the processing fee for 13 months while the renewal is for 9 months only till 15/08/21, hence refund the processing fee charged in excess for 4 months on pro-rata basis also.”
The SME had clearly communicated that they do not agree to the new stipulation of foreclosure/ pre-payment penalties and “the respective clause may please be withdrawn”.
Even after months, Chakradhar Chemicals pointed that “KMB has never responded to our submissions even till date. Our sales have been growing and thus we need more working capital. Since KMB did not respond to our submissions, another bank was ready to give us adequate limits. We thus paid KMB’s outstanding in full with interest including the foreclosure charges on term loan on 05/01/22,” Kedia wrote in the letter.
It’s been more than a month that the Kotak Mahindra Bank has not returned their security documents nor is giving no dues certificate and on top of that the bank is asking the SME to pay foreclosure charges on cash credit limits.
The bank has even registered a complaint on 17th January, 2022 on their own. This has impacted the working capital of the SME and thus adversely affected its manufacturing.